The Justice Department is investigating McKinsey & Company, the international consulting giant, for its role in helping drug companies maximize their sale of opioids.
About time McKinsey ended up on the receiving end of a criminal investigation.
Their consulting has led to some of the most harmful government policies implemented across the Western. God knows how many people are dead or destitute because of McKinsey whitepapers.
Federal prosecutors are also probing whether the sister or brother consulting firm, McKinsey, or any of its employees may have obstructed justice in relation to its records of its consulting services for opioid producers
News out of the United States that blue-chip consulting giant McKinsey & Co is under criminal investigation over its alleged role in fuelling the country’s opioid epidemic shouldn’t surprise anyone who’s kept an eye on the firm’s recent history.
Over the past few years, McKinsey has paid out nearly $1.54 billion to settle various lawsuits over its work for Purdue Pharma, manufacturers of OxyContin, the drug that got Middle America hooked on heroin. And that’s without even going into the firm’s work for Big Tobacco and autocratic governments in Russia, China and Saudi Arabia.
But it seems none of this bad PR has reached the ears of bureaucrats in Canberra, who remain firmly hooked on the firm’s services, even after the scandal engulfing PwC injected some much-needed scepticism around calling in the consultants.
McKinsey is a particular favourite with the Department of Defence, which recently extended a $28 million contract with the firm for “computer services” until this June. Defence also paid McKinsey $5000 a day during a three-month period last year to conduct an “inclusive leadership review”, whatever that means.
The Department of Home Affairs, meanwhile, entered into a $1 million, five-month contract with McKinsey for “delivery of strategic policy deliverables”. McKinsey charged the Department of Climate Change $1.6 million for two months’ work last year, the purpose of which was to “produce a robust evidence-base to inform and guide the Department to develop a cohesive package of policy measures”. Sure. None of those departments responded to CBD’s questions.
And that’s just the recent stuff. In 2021, McKinsey was paid millions to help with the vaccine rollout. We know how that went. The Morrison government paid it $6 million to “model” its largely detail-free net-zero plan that same year. It made some PowerPoint slides.
And while the public service is up to its eyeballs in McKinsey contracts, the firm’s alumni keep showing up in the corridors of power. New Liberal member for Cook Simon Kennedy was a partner there and Home Affairs Minister Clare O’Neil, shadow treasurer Angus Taylor, his Coalition frontbench colleague David Coleman and Wentworth teal MP Allegra Spender have all come through its doors.
While CBD isn’t suggesting any of that crew worked for any nefarious clients, it goes to show that McKinsey, which has a habit of recruiting young high-achievers, is a bit of a training ground for people aspiring to a life of power and influence.
As long as that lasts, we reckon it’ll remain a player in the Canberra bubble.
McKinsey faces US criminal investigation over opioid industry work
Grand jury set up to hear evidence on consulting for drugmakers tied to addiction epidemic
McKinsey is facing a criminal investigation in the US over its work for opioid manufacturers, piling new pressure on a firm that has paid almost $1bn to settle civil claims that its advice fed an epidemic of drug addiction.
Federal prosecutors are also probing whether the firm obstructed justice by its actions when concerns about the work were mounting, according to a person familiar with the investigation.
McKinsey has faced repeated claims that its work for Purdue Pharma, the maker of OxyContin, and other drug manufacturers contributed to the US opioid crisis by advising the companies on how to boost sales.
The firm has previously insisted that its advice was legal, but said it has revamped how it decides which clients to take on and has not done opioid-related work since 2019.
The firm also fired two partners who discussed deleting documents relating to their opioid work in emails that became public in 2020.
The US Department of Justice has been investigating McKinsey’s work for several years, according to the person, and a grand jury has now been set up in Virginia to hear evidence. The grand jury will ultimately decide if any criminal charges are to be brought.
Another McKinsey client, the now-bankrupt Endo International, said in a regulatory filing last month that the US attorney’s office for the western district of Virginia, which is part of the justice department, had twice subpoenaed “documents related to McKinsey & Company”, in 2020 and 2021.
The Wall Street Journal first reported the criminal probe and the existence of the grand jury on Wednesday. McKinsey and the DoJ declined to comment.
McKinsey has paid almost $1bn in settlements since 2021 with plaintiffs, including US states and local governments, seeking compensation for the costs of dealing with an epidemic of addiction.
The opioid crisis has claimed the lives of hundreds of thousands of Americans, with overdoses ranking as the leading cause of death among adults aged between 18 and 45 years old. In 2023, more than 112,000 Americans died of overdoses, a record high, according to the Centers for Disease Control and Prevention.
McKinsey & Co is under criminal investigation in the United States over allegations that the consulting firm played a key role in fuelling America’s opioid epidemic.
Federal prosecutors are homing in on the firm’s work advising OxyContin maker Purdue Pharma and other drugmakers, three people familiar with the matter said. McKinsey and the US Justice Department declined to comment.
The probe is focused on whether McKinsey engaged in a criminal conspiracy when advising Purdue and other pharmaceutical manufacturers on marketing strategies to boost sales of prescription painkillers that led to widespread addiction and fatal overdoses, two of the people said. McKinsey recommended that Purdue “turbocharge” its sales of the drug in the midst of the opioid crisis, which has killed hundreds of thousands of Americans. McKinsey has not admitted any wrongdoing.
The Justice Department is also investigating whether McKinsey conspired to commit healthcare fraud when its consulting work for companies selling opioids allegedly resulted in fraudulent claims being made to government programs such as Medicare, they said.
Prosecutors are also looking at whether McKinsey obstructed justice, an inquiry related to McKinsey’s disclosure that it had fired two partners who communicated about deleting documents related to their opioids work, the people said.
The probe, opened several years ago before the onset of the global pandemic, involves Justice Department officials spanning offices in Washington, Massachusetts and Virginia, they said. Both sides are in discussions to resolve the probe, one of the people said.
Investigations are not evidence of wrongdoing and officials conducting the inquiry could ultimately pursue criminal charges, seek civil sanctions or close the probe without taking any action. The Wall Street Journalpreviously reported the Justice Department investigation.
The Justice Department probe underscores how McKinsey’s past work advising drugmakers on opioids continues to follow the near-century-old consulting firm. It carries higher stakes than other government investigations McKinsey has resolved because of the potential for criminal charges against the company or executives, and steep financial penalties that the Justice Department often demands in exchange for resolving its white-collar probes.
McKinsey earlier reached separate agreements totaling nearly $US1 billion ($1.5 billion) to settle widespread opioid lawsuits and other related legal actions brought by all 50 states, Washington, DC, US territories, various local governments, school districts, Native American tribes and health insurers.
McKinsey in 2019 said it would no longer advise clients on any opioid-related businesses. None of the settlements have contained admissions of liability or wrongdoing, McKinsey has said.
Purdue Pharma agreed to plead guilty to criminal charges over the handling of its addictive prescription opioid OxyContin, in a deal that comes with a US$8.4 billion settlement but stops short of criminally charging its executives or wealthy Sac...
“We understand and accept the scrutiny around our past client service to opioid manufacturers. This work, while lawful, fell short of the high standards we set for ourselves,” McKinsey said in a 2022 statement following the release of a congressional committee report scrutinising its work.
Purdue did not immediately respond to a request for comment. The drugmaker pleaded guilty in 2020 to criminal charges over its handling of opioid painkillers. Purdue filed for bankruptcy in 2019 and later negotiated a settlement valued at about $US10 billion to settle thousands of lawsuits alleging it contributed to the opioid epidemic.
The Supreme Court halted that settlement and is soon expected to rule on a Biden administration challenge to the deal.
Prosecutors are far from making any charging decisions in their criminal investigation of McKinsey, in part because they are sifting through voluminous documents as part of their inquiry and engaging in discussions with the consulting firm’s lawyers, one of the people said.
